Magazine article New Statesman (1996)

Cut of Your Jib

Magazine article New Statesman (1996)

Cut of Your Jib

Article excerpt

Since Barack Obama submitted his budget plan to Congress on 14 February, both George Osborne and Ed Balls have rushed to claim that the US president is on their side in the deficit war. At an IMF meeting in Washington, DC, Osborne declared that Obama's plan to cut the federal deficit by $4trn over the next 12 years proved that Labour was "entirely isolated in the international community". But the shadow chancellor swiftly returned fire, claiming that Osborne's excessive cuts were the "opposite of what we have seen in the US" and that it was the Chancellor who was "isolated". So, is Obama a deficit hawk or a deficit dove?

Under the US president's plans (see graph), public-sector borrowing will fall from 10.9 per cent of GDP this year to 3.3 per cent in 2016. The coalition aims to reduce borrowing from 9.9 per cent of GDP this year to 1.5 per cent in 2.016. Thus, although the total fiscal consolidation planned by Osborne remains the largest, the difference is not as great as Balls implies. …

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